Health Operations Management

As governments and other health care financing agencies are increasingly requiring
health care providers to modernise their services in order to make more intensive and
efficient use of existing health care resources, health care providers are facing growing
pressures to change the ways in which they deliver services. These pressures have meant
that health operations management has become an increasingly important aspect of
managing health services.
Health Operations Management is the first text to address operations management
within the context of health services. This exciting text offers readers the opportunity to
reflect on the direct application of the principles of this important subject by illustrating
theory with real-life case studies. In addition it contains a discussion of related fields
including health care quality assurance and performance management. The case studies
cover:

analysis of hospital care processes

scheduling outpatient appointments
admission planning
master scheduling of medical specialists
aggregate production and capacity planning
services for older people.

This is an original and timely textbook and essential reading for students of health care
management, health care managers and clinicians alike.
Jan Vissers is Professor in Health Operations Management at the Institute of Health
Policy and Management of Erasmus University Medical Centre in Rotterdam, the
Netherlands. He is also affiliated to Eindhoven University of Technology and Prismant,
Institute for Health Care Management Development in Utrecht.
Roger Beech is Reader in Health Services Research, Keele University and the Academic
Lead for Research, Central Cheshire Primary Care Trust.

ROUTLEDGE HEALTH MANAGEMENT SERIES

Edited by Marc Berg, Robbert Huijsman, David Hunter,

John vretveit

Routledge Health Management is one of the first series of its kind, filling the need
for a comprehensive and balanced series of textbooks on core management topics
specifically oriented towards the health care field. In almost all western countries, health
care is seen to be in a state of radical reorientation. Each title in this series will focus
on a core topic within health care management, and will concentrate explicitly on the
knowledge and insights required to meet the challenges of being a health care manager.
With a strong international orientation, each book draws heavily on case examples and
vignettes to illustrate the theories at play. A genuinely groundbreaking new series in a
much-needed area, this series has been put together by an international collection of
expert editors and teachers.
Health Information Management
Integrating information technology in health care work
Marc Berg with others
Health Operations Management
Patient flow logistics in health care
Edited by Jan Vissers and Roger Beech
Leadership in Health Care
A European perspective
Neil Goodwin
Performance Management in Health Care
Improving patient outcomes, an integrated approach
Edited by Jan Walburg, Helen Bevan, John Wilderspin and Karin Lemmens

Health Operations
Management
Patient flow logistics
in health care
Edited by

Jan Vissers and Roger Beech

First published 2005

by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
270 Madison Ave, New York, NY 10016
Routledge is an imprint of the Taylor & Francis Group
This edition published in the Taylor & Francis e-Library, 2005.
To purchase your own copy of this or any of Taylor & Francis or Routledges
collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.

2005 Jan Vissers and Roger Beech editorial matter

and selection; individual chapters, the contributors
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic, mechanical,
or other means, now known or hereafter invented, including
photocopying and recording, or in any information storage or
retrieval system, without permission in writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
Vissers, Jan.
Health operations management: patient flow logistics in health care /
Jan Vissers and Roger Beech 1st ed.
p. cm.
Includes bibliographical references.
1. Health services administration. 2. Hospitals Administration.
3. Operations research. I. Beech, Roger. II.Title.
RA971.V54 2005
362.1068dc22
2004030799
ISBN 0-203-35679-9 Master e-book ISBN

ISBN 0-203-38736-8 (Adobe eReader Format)

ISBN10: 0415323959 (hbk)
ISBN13: 9780415323956 (hbk)
ISBN10: 0415323967 (pbk)
ISBN13: 9780415323963 (pbk)

Contents

List of figures
List of tables
Notes on contributors
Preface
List of abbreviations

vii
x
xiii
xviii
xx

1 Introduction
Jan Vissers and Roger Beech
Part I

CONCEPTS

13

2 Lessons to be learned from operations management

Will Bertrand and Guus de Vries

15

3 Health operations management: basic concepts and approaches

Jan Vissers and Roger Beech

39

4 Unit logistics: allocation and utilisation of resources

Jan Vissers

51

5 Chain logistics: analysis of care chains

Jan Vissers and Roger Beech

70

6 Frameworks for health operations management

Jan Vissers, Will Bertrand and Guus de Vries

84

Part II CASE STUDIES

95

7 Description and analysis of hospital care processes

Jan Vissers

97

CONTENTS
8 Aggregate hospital production and capacity planning
Jan Vissers
9 How to take variability into account when planning the capacity
for a new hospital unit
Martin Utley, Steve Gallivan and Mark Jit

116

146

10 Admission planning and patient mix optimisation

Jan Vissers, Ivo Adan and Miriam Eijdems

162

11 Master scheduling of medical specialists

Erik Winands, Anne de Kreuk and Jan Vissers

184

12 A patient group based business planning model for a surgical specialty

Jan Vissers, Ivo Adan, Miguel van den Heuvel and Karin Wiersema

202

13 Scheduling appointments in outpatient clinics

Dave Worthington, Richard Goulsbra and James Rankin

223

14 Cardio care units: modelling the interaction of resources

Jan Vissers and Gijs Croonen

249

15 Service philosophies for hospital admission planning

Jan Vissers and Ivo Adan

264

16 Services for older people: finding a balance

Paul Forte and Tom Bowen

282

Part III CONCLUSION

305

17 Challenges for health operations management and change management

Jan Vissers, Roger Beech and Guus de Vries

307

Index

317

vi

Figures

1.1
1.2
2.1
2.2
3.1
3.2
3.3
4.1
4.2
4.3
4.4
4.5
4.6
5.1
5.2
5.3
6.1
6.2
7.1
7.2
7.3
7.4
8.1

Meta-process model of a health care delivery system

Conceptual framework of health OM planning and control processes
The effects of production volume and product variety on production
costs
Production control functions for production-to-stock
Distribution of length of stay for general surgery
Workload of general surgery admission for nursing staff
Unit, chain and network perspectives
Capacity concepts for resources
Average resource utilisation and deviations from the average in an
operating theatre department
Workstation and resources
The hospitals supply structure as an interaction between
specialist-time and workstations
Capacity load levelling per leading resource department
Capacity load levelling per specialty (inpatient process)
A graphical presentation of a process for a patient for hip replacement
Forms of multidisciplinary processing
Waiting times, lead-times and operations on a time dimension
Framework for production control of hospitals
Hierarchical control framework for care chain management
Patient group management and planning framework
Structure of the demandsupply model for hospital processes
Graphical illustration of the care process for a trauma patient with
outpatient follow-up
Throughput times for trauma patient group processes
Admissions, discharges and bed occupancy rates in Dutch hospitals
(1991)

2
7
18
24
42
43
47
56
57
58
63
66
67
75
77
80
87
93
100
105
107
112
120

vii

FIGURES
8.2
8.3

Production and capacity planning, and position in planning framework

Illustration of the variables included in the longer-term projections
of patient flows and resource requirements
8.4 Impacts of changes in population on inflow of patients (1995)
8.5 Number of admissions per week (1991)
8.6 Average number of admissions for general surgery
8.7 Procedure for resource allocation
9.1 Variability and capacity planning, and position in planning framework
9.2 Distribution of bed requirements on a Monday
9.3 Distribution of bed requirements on a Friday
9.4 Mean post-operative bed requirements and the upper 95% limit of
bed requirements for each day of the week
9.5 The percentage of Fridays on which demand exceeds capacity for a
range of possible operational capacities
10.1 Admission planning and patient mix optimisation, and position in
planning framework
11.1 Master scheduling of medical specialist, and position in planning
framework
12.1 Patient group based business planning model, and position in planning
framework
12.2 Representation of the system at the level of the specialty
12.3 Outline for modelling demand
12.4 Process model of laparotomy or laparoscopy
12.5 Trajectories for the process of laparotomy/laparoscopy
12.6 Modelling the demand per week
12.7 Calculation of the demand for capacity for different units in week T
12.8 Use of outpatient resources in current setting, split into used,
non-used and overrun
12.9 Use of resources at the A&E department, expressed in number of
patients seen and broken down into patient groups
12.10 Use of resources at the operating theatre department, broken down
to urgency
13.1 Scheduling appointments in outpatient clinics, and position in planning
framework
13.2 A patients journey at a clinic
13.3 Performance of registrar clinics under previous and proposed
appointment systems
13.4 Performance of consultant clinics under previous and proposed
appointment systems
14.1 Modelling cardiology patient flows, and position in planning framework
14.2 Logistic approach followed in case study
14.3 Structure of the model

viii

121
123
125
130
131
140
150
156
156
157
158
165
187
205
207
210
210
212
213
213
217
218
218
226
232
245
245
252
254
257

FIGURES
14.4
15.1
15.2
16.1
16.2
16.3
17.1
17.2

Occupancies and logistic problems for current situation

Service philosophies for admission planning, and position in planning
framework
Distribution of length of stay
Structure of the Balance of Care model
Graph of summary comparison between current baseline and
projected costs of scenario
Potential changes in care location shown graphically
Outline of book
Overview of case studies in production control framework perspective

260
267
270
286
291
299
308
309

ix

Tables

2.1

Similarities and differences between manufacturing and health care

operations
27
Units, resources and operation types in a hospital setting
41
Characteristics of processes, illustrated for key patient groups within
general surgery
45
Differences between the unit, chain and network logistics approaches
49
Analysis of resource use of the chain for patients with hip replacement
78
Summary of resource use of the chain for patients with hip replacement
79
Waiting times and lead-times in the chain for patients with hip
replacement
79
Production control functions distinguished in the planning framework
for hospitals
85
Framework for hospital production control
889
Information on weekly clinic sessions, general surgery specialty
102
Information on the mix of patients per clinic type, general surgery
specialty
103
Overview inflow for general surgery patient groups over a week period
106
Summary of steps in care process for ankle ligaments trauma patients
with follow-up
109
Match between demand for and supply of time slots in clinics
110
Utilisation of resources in the outpatient department
111
Other average clinical output on a weekly basis per patient group
111
Workload of diagnostic departments
112
Throughput times per process and patient group
113
Changes in population projections within the region
124
Influence of change in demand for care at study hospital
125
Influence of change in market share on inflow to hospital
126
Resource impact projections for 1995 due to population development
127

3.1
3.2
3.3
5.1
5.2
5.3
6.1
6.2
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
8.1
8.2
8.3
8.4

TABLES
8.5
8.6
8.7
8.8
8.9
8.10
9.1
9.2
9.3
9.4
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
12.1
12.2
12.3
12.4

Development of length of stay for some specialties according to

opinions of specialists
Resource impact projections for 1995 due to population and
length-of-stay development
Utilisation of bed resources by specialty
Simultaneous use of inpatient resources by specialty
Example bed allocation scheme based on actual resource use
Corrections on overall hospital targets for resource utilisation
The repeating weekly cycle of the planned number of general surgery
cases
The post-operative length-of-stay distribution used to generate the
planning estimates of post-operative capacity requirements
Length-of-stay distributions for three different capacity planning
scenarios
Mean and variance for bed requirements for the scenarios of
Table 9.3
Number of admissions per category of patients in the sample week
and the average week
Characteristics per category of patients
Available resources for orthopaedics
Target occupancy levels per type of resource
Relative weights per type of resource
Occupancy levels for the current setting
Admission profile for current setting
Occupancy levels for the current setting with reduced operating
theatre capacity
Occupancy levels with maximum weight for operating theatre use
Finding the proper allocation of resources
Allocated resources per day of the week
Occupancy levels with varying amounts of allocated capacity per day
Current master schedule orthopaedic surgeons
Weekly activities for the specialists
Bi-weekly activities for the specialists
Capacity restrictions for operating theatres
Weighting factors for relative importance of criteria
Activities in mathematical model
Final weekly master schedule for the specialty of orthopaedics
Score for the master schedule
Patient groups, trajectories and number of patients per year
Available capacity and specifications for resources
Assumptions made in modelling demand and supply
Comparison of the results of the scenarios with the base scenario

128
129
132
134
137
141
152
152
160
160
167
167
169
170
170
177
177
178
178
180
180
181
189
190
190
191
192
193
197
198
211
214
215
220

xi

TABLES
13.1
13.2
13.3
13.4
13.5
13.6
13.7
13.8
13.9
14.1
14.2
14.3
14.4
15.1
15.2
15.3
15.4
15.5
16.1
16.2
16.3
16.4
16.5
16.6
16.7
16.8

Guide One: Process Mapping, Analysis and Redesign

Guide Two: Measurement for Improvement
Guide Three: Matching Capacity and Demand
Departmental guidelines and implications for clinic durations
Non-attendance rates by previous behaviour
Accuracy of overbooking rule for registrars list at observed clinics
Simulation summary statistics for 12 patient consultant clinics
Proposed appointment schedules
A simulated comparison of appointment schedules
Characteristics per patient flow
Arrival of emergency patients per time-period
Bed occupancy of CCU and F1
Logistic problems (per week)
Capacities available in case study hospital
Average resource requirement profile during stay of patient
Summary of characteristics of service philosophies
Summary of simulation results for a high load level
Summary of simulation results for a very high load level
Patient categories
Key service elements
Example care options for a patient category
Summary results table
Service volumes for scenario by patient category
Patient categories for intermediate care
Potential care options for intermediate care patients
Actual and estimated total whole time equivalents (WTEs) for
selected care staff groups across England
16.9 Potential for change in bed utilisation by current location of beds
16.10 Care options related to patient dependency in East Berkshire
16.11 Inputs to community-based staffing requirements

xii

234
235
235
239
240
241
241
243
244
255
257
261
261
269
270
271
275
277
287
288
290
292
293
295
296
297
299
300
300

Notes on contributors

Ivo Adan is Associate Professor in Stochastic Operations Research at the

Department of Mathematics and Computer Science of Eindhoven University of Technology. Received his M.Sc. Mathematics in 1987 and his Ph.D.
from EUT in 1991. Currently member of the editorial board of Statistica
Neerlandica and Queueing Systems. His main areas of interest are: Markov
processes, queueing models, stochastic fluid flow models, inventory control
and performance analysis of production and warehousing systems.
Roger Beech is a reader in Health Services Research in the Centre for Health
Planning and Medicine, University of Keele, and the Academic Lead for
Research for Central Cheshire PCT. He is also an honorary member of the
Faculty of Public Health Medicine. He has a M.Sc. in Operational Research
and Management Science (University of Warwick, 1981) and a Ph.D. in
Industrial and Business Studies (University of Warwick, 1988). His research
can be categorised as having four main but overlapping themes: the economic
and organisational aspects of health services and in particular services for
elderly people, for intermediate care, and for patients with stroke; the development and application of methodologies for planning health services and in
particular services for intermediate and emergency care; health needs assessment and in particular needs for renal services; and the use of models to
evaluate changes in the delivery of health care.
Will Bertrand is Full Professor in Production and Operations Management at
the Department of Technology Management of Eindhoven University of
Technology since 1988. His main areas of interest are: production control in
engineer-to-order manufacturing management, supply chain control, hierarchical control of production and inventory systems, planning and control of
new products development processes.

xiii

NOTES ON CONTRIBUTORS

Tom Bowen has degrees in Mathematics and Operational Research, and an extensive background of projects in the fields of health care planning and information systems spanning two decades. After analytical and management posts in
both the Department of Health and the NHS, he has been operating in consultancy for the NHS and in other European countries for the past nine years.
Special interest areas include the development of service plans for patient
groups with chronic care needs, in particular services for older people. He
has been involved with developing and applying the Balance of Care approach
for several years; originally as an analyst at the Department of Health and,
more recently, through the activities of the Balance of Care Group. He is an
active member of the Operational Research Applied to Health Services
Working Group.
Gijs Croonen is Quality Coordinator at Rivierenland Hospital in Tiel in the
Netherlands. Received his MA Industrial Psychology and Social Psychology
from Katholieke Universiteit Brabant in 1989. From 1989 to 1993 he was a
management consultant at Rivierenland Hospital, from 1993 serving in several
functions at the same hospital. His main areas of interest are: quality management, patient safety, patient flow management and management information.
Miriam Eijdems has been a management consultant at VieCuri Medical Centre
for North Limburg since 1994. Before this she worked as a registered operating theatre assistant and studied Industrial Engineering and Management
Science at the Polytechnic in Eindhoven. During the years she has been
involved in many projects in the area of patient flow logistics, also applying
simulation models.
Paul Forte has degrees in Geography and Planning and worked in health services
research at the University of Leeds obtaining his Ph.D. in 1990. He was with
the Department of Health Operational Research Service from 198591 and,
since then, has worked as an independent consultant in health planning and
management and as a member of the Balance of Care Group. He has also been
closely associated with the Centre for Health Planning & Management at
Keele University, England since 1991 and he is currently an honorary senior
lecturer on the MBA and Diploma programmes. Throughout his career Paul
has focused on the development of decision support systems for health service
management, and their application: how and why people use information to
support planning and management decision making.
Steve Gallivan is Professor of Operational Research at University College
London and Director of the Clinical Operational Research Unit. He also acts

xiv

NOTES ON CONTRIBUTORS

as a scientific advisor to the National Confidential Enquiry into Patient Outcome and Death, UK. He received his B.Sc. and Ph.D. from University
College London in 1971 and 1974 respectively. He spent many years applying
Operational Research techniques in the context of traffic engineering before
switching to address problems in health care. The majority of his research
involves developing and applying analytical methods to generate insight
concerning a wide range of health care problems, from the clinical management of patients to the structure and organisation of health service delivery.
Richard Goulsbra is an Operational Research analyst at the Department for
Work and Pensions. Current projects include analysis of the appointment
systems in Jobcentre Plus offices in an attempt to increase the proportion of
advisor time spent with customers, reduce the occurrence of clients failing to
attend their appointments, and to lead to better management of the problem
as a whole. He received his M.Sc. in Operational Research from Lancaster
University in 2003 having obtained a B.Sc. in Mathematics, Statistics and OR
at UMIST a year earlier. His summer project in 2003 was an operations
management study of ophthalmology clinics at the Royal Lancaster Infirmary.
Miguel van den Heuvel is an actuarial employee at Delta Lloyd General
Insurances,Amsterdam, NL. He received his M.Sc.Applied Mathematics, with
a specialisation in Statistics, Probability, and Operations Research, from EUT
in 2003. He is currently involved in a study of Actuarial Sciences at the
University of Amsterdam.
Mark Jit is a research fellow in the Clinical Operational Research Unit,
University College London. He received his Ph.D. from University College
London in 2003. His Ph.D. consisted of building mathematical models of cell
signalling. His research is now focused on applying modelling techniques to
problems in health care, particularly those associated with capacity planning.
Anne de Kreuk is a research analyst and model developer at ABN Amro Bank
in the department Asset Management. She received her M.Sc. Applied and
Industrial Mathematics with a specialisation in operations research from
Eindhoven University of Technology in January 2005. During her studies
she became involved in a project concerning health operations management.
James Rankin is a member of the Business Modelling Team at Tribal Secta.
Current projects include developing draft HRG Version 4 at the NHSIC,
Activity and Capacity Modelling for Papworth NHS Trust and working with
Secta Starfish on Supporting People Programme needs analysis for a variety
of Local Authorities. He received his M.Sc. in Operational Research from

xv

NOTES ON CONTRIBUTORS

Lancaster University in 2003 having previously obtained a B.Sc. in Operational

Research at the University of Hertfordshire. His summer project in 2003 was
an operations management study of ophthalmology clinics at the Royal
Lancaster Infirmary.
Martin Utley is a principal research fellow and Deputy Director of the Clinical
Operational Research Unit at University College London. He also holds an honorary research post at Guys Hospital London and acts as a scientific advisor to
the National Confidential Enquiry into Patient Outcome and Death, UK.
Martin received his B.Sc. from the University of Manchester in 1993 and
his Ph.D. from the University of Glasgow in 1996. His interest is in developing and applying Operational Research techniques to improve the quality of
information available to those planning, delivering or evaluating health services.
Jan Vissers is Professor in Health Operations Management at the Institute of
Health Policy and Management at Erasmus Medical Centre Rotterdam, and
also Assistant Professor in Health Operations Management at the Department of Technology Management of Eindhoven University of Technology,
Eindhoven, NL. He is also a senior management consultant at Prismant
Institute for Health Care Management Development in Utrecht, NL.
Received his M.Sc. in Industrial Engineering and Management Science from
EUT in 1975 and his Ph.D. from EUT in 1994. Member and current chairman
of the European Working Group on Operational Research Applied to Health
Services and member of the editorial board of Health Care Management
Science. Received the 1995 Baxter Award for his thesis Patient Flow based
Allocation of Hospital Resources for its contribution to Health Care
Management. His research focuses on the analysis, design and control of
operational health care processes and systems. Special interest areas are the
development of the process concept and the allocation of shared resources
within a hospital setting and beyond.
Guus de Vries is Professor in Health Operations Management at the Institute of
Health Policy and Management at Erasmus Medical Centre Rotterdam. He is
also a partner in DamhuisElshoutVerschure Management Consultants in Den
Bosch, NL. He received his M.Sc. in Industrial Engineering and Management
Science from EUT in 1979 and his Ph.D. from EUT in 1984. Editor of a
book (in Dutch) on patient flow management and co-editor of a series
of books (in Dutch) with case studies on applications of industrial engineering to health care settings. His research interest areas are: staffing and
workload control, patient flow management, analysis and (re)design of health
care processes in hospitals and other health care institutions, including
organisational development and change management topics.

xvi

NOTES ON CONTRIBUTORS

Karin Wiersema received her Masters Degree Health Sciences, specialisation

Health Policy and Administration, in 2002 at Maastricht University. Since
2002, she is Management Consultant at Elkerliek General Hospital in
Helmond. Between 1989 and 2001 she was a nurse at an intensive care department at the same hospital. Her practice experience is very useful for the
projects she is currently involved in. Main areas of interest are: patient flow
logistics, management information, general management and innovation. She
is a member of the board of the national society NVOG (Dutch Society for
Organisation in Health Care).
Erik Winands received his M.Sc. degree in Industrial and Applied Mathematics
from Eindhoven University of Technology in 2003. Currently, he is doing
research for his Ph.D. thesis at the same university. His main research interests are in queueing theory and its applications to the performance analysis of
production systems, which is also the focus of his Ph.D. study.
Dave Worthington is a Senior Lecturer in Operational Research in the
Department of Management Science, Lancaster University Management
School, UK. He is trained as a mathematician at Birmingham University and
then as an operational researcher/statistician specialising in health and social
services at Reading University. He also did his Ph.D. thesis at Reading
University, investigating hospital waiting lists as queueing systems with feedback. His research, project work, consultancy and publications are in two main
areas: the health care applications of management science; and queue management including the development and use of queueing models. As in the case
of this book, these two research interests sometimes overlap.

xvii

Preface

This is the first book with an explicit focus on health operations management
(health OM) and its development. There are two main reasons why we and our
contributing authors often educated in operations management (OM) but
working in the field of health care felt that the time was right to produce a dedicated book on health operations management. The first reason surrounds the
current and evolving climate in which health services are delivered. The second
surrounds the need to make operations management theories and techniques more
accessible to heath care professionals and practitioners and to those studying health
care management.
We define health OM as the analysis, design, planning and control of all of the
steps necessary to provide a service for a client. In other words, health OM is
concerned with identifying the needs of clients, usually patients, and designing and
delivering services to meet their needs in the most effective and efficient manner.
It can be argued that the importance and complexity of this agenda of responsibilities is increasing.
Health care providers are having to respond to changes in patient demands for
health care. In many countries the proportion of the population aged over 65 is
increasing.This demographic change will increase overall demands for health care
and it is also likely to affect the ways in which health care is delivered: for example,
in the United Kingdom there is increasing emphasis on developing services in the
community as an alternative to acute hospital-based care. Regardless of changes in
overall demand, individual consumers of health care are becoming more vocal.
For example, they are less willing to accept long waiting times for treatment and
the development of the internet and initiatives such as expert patient programmes
mean that they are more aware of the types of care that they should receive.
Health care providers are also facing pressures to change the ways in which they
deliver services. Governments and other health care financing agencies are increasingly requiring health care providers to modernise their services such that they

xviii

PREFACE

make more intensive and efficient use of existing health care resources. In the UK
a government-funded department, the Modernisation Agency, has been established
to facilitate the adoption of improved approaches to analysing and managing health
services. In addition, initiatives such as the development of clinical guidelines and
the promotion of evidenced based care are encouraging health care providers to
increase the effectiveness of their services. Although such initiatives have a clinical
focus they often require a change in the organisation of services: for example,
changes in the organisation of radiography departments may be needed if guideline targets in terms of access to CT scan facilities by stroke patients are to be met.
Hence the relevance and importance of health OM principles and approaches
are increasing. Up until now, health care professionals, practitioners and students
wanting to find out more about operations management would have had to turn
to general textbooks, which describe the application of operations management
principles and approaches in the manufacturing and service sectors. When your
interest lies in health care, this implies that you first have to familiarise yourself
with general operations management and then translate general principles and
approaches into the health service setting. Not everyone will have the time or
patience to follow this route and there is a danger that some of the key messages
may be lost in translation. A dedicated health OM textbook therefore has the
advantage of a health specific introduction of OM principles and approaches, with
possibilities for direct application. In addition, as health care application is the focus
of this book, it also contains a discussion of related fields of development, such as
health care quality assurance and performance management. As the prime orientation of health care students and health care managers is health care management
development, this will help them to identify how to position health OM within
the context of these other initiatives and disciplines.
In the initial chapters of the book a conceptual framework is developed in which
to position health OM theories and techniques. A series of case studies then
follows. In addition to reinforcing the messages of the early chapters, these case
studies offer practical illustrations of the situations and settings in which health
OM theories and techniques have been used.They also help to generate an awareness of how the approaches and techniques described might be used in other areas
of health care. Taken overall, the book allows us and our co-authors to share
our experiences in health OM with others working in the same area of application. Our aim is that the book should help to promote a more widespread understanding of health OM theories and approaches. In turn, the adoption of these
theories and approaches will help to facilitate improvements in the delivery of
services for patient care.
December 2004
Jan Vissers
Roger Beech

xix

Abbreviations

A&E
ABACUS
AEP
AVGs
BAWC
BAWOC
BOM
BOR
BPR
BWW framework
CAGs
CCU
CNA
CT scan
CVA
DC
DNA
DRGs
ECG
EEG
ERP
FTE
GF
GP
HCRPS
HRGs
HRP model
IC

xx

accident and emergency

Analysis of Booked Admissions and Capacity Use
Appropriateness Evaluation Protocol
ambulatory visit groups
booked admission with coordination
booked admission without coordination
bill of materials
bill of resources
business process redesign
framework by Bertrand, Wortmann and Wijngaard
coronary angiographies
cardio care unit
could not attend
computerised tomography scan
cerebrovascular accident
day case
did not attend
diagnosis related groups
electrocardiogram
electroencephalogram
Enterprise Resource Planning
full time equivalent
goods flow
general practitioner
health care requirements planning system
health related groupings
Hospital Resource Planning model
intensive care

ABBREVIATIONS

ICD
IIASA
ILP
IQP
JIT
MPS
MRP-I
MRP-II
MRU
NHS
NP
OM
OP
OPD
OPT
OT
OTD
PAV
POA
PSU
PTCAs
PU
SCM
SCOR
SHO
SMED
SOM
SP
TCs
UTA
VBA
WTEs
ZWT

International Classification of Diseases

International Institute for Applied Systems Analysis
integer linear program
integer quadratic program(ming)
just-in-time
master production schedule
Material Requirements Planning
Manufacturing Resources Planning
maximum resource use
National Health Service
nursing capacity
operations management
outpatient
outpatient department
Optimized Production Technology
operating theatre
operating theatre department
peripheral arterial vascular
pre-operative assessment
pre-operative screening unit
percutane transluminal coronary angiographies
production unit
supply chain management
Supply Chain Operations Reference
senior house officer
Single Minute Exchange of Dies
Schedule Optimisation Model
specialist
Treatment Centres
unable to attend
Visual Basic for Applications
whole time equivalents
zero waiting time

xxi

Chapter 1

Introduction
Jan Vissers and Roger Beech

DEFINING HEALTH OM
The term operations management refers to the planning and control of the
processes that transform inputs into outputs. This definition also applies to health
OM. Consider the individual doctor/patient consultation.The input to the consultation process is a patient with a request for health care. The output of the
consultation process might be that the patient is diagnosed, referred to a further
service, or cured.The resources that have to be managed to transform inputs into
outputs are those associated with the care provided by the individual doctor: for
example, their time and any diagnostic or therapeutic services that they use.
In this illustration the role of the health OM process was to ensure that adequate
resources were in place to provide an acceptable service for the patient. Hence,
health OM focuses on the individual provider that produces a health service and
on the tasks involved to produce this service.
In the above illustration the individual provider was a doctor. However, the
individual provider might be, for example, a hospital department (e.g. an X-ray
department), a hospital, or a network of hospital and community-based services
(e.g. services for the acute care and rehabilitation of patients who have suffered a
stroke). At each level both the scale and scope of the resources to be planned and
controlled increase, as does the complexity of the OM task.
Figure 1.1 presents an example of a health OM view of an individual hospital
provider, adapted from a meta-process model of a health care delivery system
described by Roth (1993).The agenda for health OM is covered by the central box.
The central function of the hospital is to provide patient care. Hence, patient
demand for care is the key input that influences the planning and control of the
resources required to transform inputs into outputs. However, as Figure 1.1 illustrates, other inputs influence both the types and levels of patient demand and the
ways in which the hospital delivers care. These other inputs include the overall

JAN VISSERS AND ROGER BEECH

INPUTS

TRANSFORMING PROCESSES

PATIENT
DEMAND
(perceived need)

CLINICAL
PROCESSES
treatment modality
treatment protocol
providerpatient
encounters

number
specialty
teaching
reputation

PURCHASERS
(finances)
SUPPLIERS

MANAGEMENT
PROCESSES
infrastructure
structure
providerpatient
encounters

HEALTH
STATUS

ANCILLARY
PROCESSES

Other Hospitals
and Providers

OUTPUTS

CLIENT
PERCEPTION

USE OF
RESOURCES

Figure 1.1 Meta-process model of a health care delivery system.

Adapted from Roth (1993)

level of finance available to provide care, the availability of goods from suppliers,
and the nature and actions of other hospitals.
Figure 1.1 highlights three generic processes for transforming inputs into
outputs: clinical, management and ancillary. Clinical processes are probably the
most important as they are directly associated with the planning and control of
those resources used for the diagnosis and treatment of patients. However, management processes are needed to support the clinical processes. These management
processes include those for organising the payment of staff and for purchasing
goods from suppliers. Finally, ancillary processes are needed to support the general
functioning of the hospital.These processes include the organisation of services for
cleaning hospital wards and departments and for maintaining hospital equipment.
The resources to be planned and controlled within each of these processes include staff (e.g. doctors, nurses), materials (e.g. drugs, prostheses), and
equipment (e.g. X-ray machines, buildings). Inadequate planning and control
of resources within any of the processes can have an impact on the others. For
example, deficiencies in the management processes for ordering materials may
affect the quality of care that can be delivered by the clinical processes (e.g. a
shortage of equipment to support care at home may lead to delays in patient
discharge from hospital). Similarly, if services for the cleaning of hospital wards
are inadequate, the potential for hospital acquired infections will be increased, as
will the likelihood of subsequent ward closures.

INTRODUCTION

Hence, when planning and controlling the resources that they use, an individual provider must also consider the ways in which their actions might impinge
upon other individual providers, for example other hospital or community-based
departments. In this sense, their actions represent inputs to other processes for
transforming inputs into outputs.
Finally, Figure 1.1 illustrates the outputs of the OM processes that must be
monitored. Health status markers (e.g. mortality rates, levels of morbidity and
disability) are relevant to the success with which clinical processes are transforming inputs into outputs, as are measures of client perception/satisfaction
where the client (and/or their family) is the patient. In addition, the client of a
process might also be a hospital doctor who requires a service from a diagnostic
department or a hospital manager who requires details of patient activity levels
from doctors. Similarly, resource performance output measures are relevant to
all three generic processes as they are needed to monitor the efficiency (e.g. patient
lengths of stay, response times of ancillary support services) and effectiveness (e.g.
use of appropriate or modern procedures) with which resources have been used
to transform inputs into outputs.
Again, there are relationships and potential conflicts between the different types
of output. For example, measures to increase patient satisfaction by reducing
patient waiting times might require additional investment and mean that the
hospital is unable to achieve its budgetary targets. Similarly, budgetary pressures
may mean that a hospital is unable to invest in all of those services that are known
to be effective in improving health status: examples might include expensive treatments for rare conditions. Hence, in its attempts to ensure that there is an effective and efficient organisation of the delivery of services, the role of health OM is
to achieve an acceptable balance between different types of output.
Having illustrated the nature of health OM it is now possible to offer a definition
of health OM:
Health OM can be defined as the analysis, design, planning, and control
of all of the steps necessary to provide a service for a client.
CONTEXT OF HEALTH OM
This section discusses the context of health OM decision making: drivers for
change and factors that influence decision making. The previous section demonstrated that the system of inputs,transforming processes and outputs is subject
to its own internal dynamics and influences. Efforts to improve the outputs from
one process might have an impact on the inputs and outputs of others. Here, we
will discuss some of the key external factors, and additional internal factors,
that influence health OM decision making. Again, for the purposes of illustration,
we will take the perspective of an individual hospital provider.

JAN VISSERS AND ROGER BEECH

Probably the main external factor that affects the behaviour of individual
providers is the overall health care system setting in which they function, for
example, market and for profit, national health system or government regulated.
In a for profit setting, the emphasis for providers is on profit maximisation. As a
result, providers will want to maximise the number of patients whom they can
treat at acceptable standards of quality but at minimum costs per case. The
market environment, therefore, creates the incentives for providers to ensure that
the processes for transforming inputs into outputs are functioning in an effective
and efficient way. Providers must continually review and invest in their transforming processes as a means of maintaining their market share, attracting new
patients or reducing costs. For example, the market creates the incentives for
providers to invest in new health care technologies in order to either attract more
patients or reduce costs per case.
In a national health system or government regulated system, providers are
budgeted by the contracts annually arranged with purchasers (government related
bodies or insurance organisations). In such a system the main incentive for
providers is to ensure that budgetary targets are not exceeded. Hence, providers need to invest in mechanisms for monitoring the use of key resource areas
such as the use of beds and theatres. Beyond the need to ensure that cost
performance targets are achieved, relative to the market environment, providers
probably have lower incentives to continually review and update transforming
processes or to ensure that other output measures, such as client perception are
satisfactory.
However, this situation is changing and, in the absence of market incentives,
regulation is being used as a vehicle for change. For example, in the National Health
Service (NHS) of the United Kingdom (UK), National Service Frameworks are
being developed for key disease areas (e.g. diabetes) or patient groups (e.g. older
people). These frameworks specify the types of services that should be available
for patient care: hence, they have a direct influence on clinical processes.The NHS
of the UK is also setting performance or output targets for providers, for
example, maximum waiting times for an outpatient appointment or an elective
procedure. Again, to ensure that such targets are met, providers will need to
review and modify their processes for transforming inputs into outputs.
In Europe, government regulated health care systems are still dominant but
gradually more market incentives are being introduced. In the US, although health
care is shaped as a market system, the level of regulation is increasing through
developments such as the development of Health Maintenance Organisations.
Beyond the health care system, and the actions of governments, other external
factors are affecting the context in which health OM decisions are made. For
example, most western countries are experiencing changes in the demographic
mix of their populations such that there is an increasing proportion of older
people. Both the scale and nature of hospital resources (and those in other settings)

INTRODUCTION

will need to be adjusted to meet this demographic change. For example, the NHS
of the UK is currently expanding its services for home-based care as an alternative
to hospital care.
In addition, advances in medical technology (for example, new drugs and other
forms of treatment) are either changing or expanding the options that are available for patient care. Providers will need to decide if and how they should respond
to these advances. Again, government regulation is likely to be used as a vehicle
for change.
Finally, via the internet and other outlets of the media, patient knowledge of
health care treatments and expectations of heath care providers are increasing.
Providers are having to adjust their care processes to address this change in
consumer expectations.
Up until now, this discussion of the context of health OM has focused on
external factors that affect the environment in which decisions are made. In
comparison to other service or manufacturing organisations, the internal environment for decision making is in itself unusual.
Often, the roles and responsibilities of those involved in decision making are
either not very clearly defined or are overlapping. Health care management often
takes the form of dual management, in which clinical professionals share management responsibilities with administrative staff and business managers. Finding out
who is actually managing the system can therefore be a real issue in health care
organisations.
In addition, health care management decision making often takes the form of
finding consensus among the different actors involved: managers, medical professionals, nursing staff, paramedical disciplines, administrative staff. These actors
often have different interests along the dividing lines of quality versus costs
or effectiveness versus efficiency. As health care does not have the possibility of
defining profit as an overall objective, it is often difficult to find the right trade-off
between these two perspectives of managing organisations.
Hence, there is a range of external and internal factors and challenges that
influence health OM decision making.This book presents a scientific body of knowledge and reflection to support the planning and control of health care processes.

RELATED FIELDS
Health OM activities are complemented by and related to other areas of management activity that focus on the core processes of the organisation. These other
areas include:

quality management, which aims to improve and maintain the quality of

services delivered by processes;

JAN VISSERS AND ROGER BEECH

performance management, which concentrates on measuring and monitoring

the performance of the organisation in terms of the outcomes of processes;
information management, which concentrates on the development of tools
for providing and handling information about processes; and
operational research, which offers analytical techniques and approaches that
can be used to investigate and improve processes.

Often the boundaries between health OM and these other areas of management
might seem somewhat fuzzy. However, it could be argued that health OM
creates the broad agenda that is then addressed, in part, by these other fields of
management.

OUTLINE OF THE BOOK

This book is the first to focus explicitly on health OM and its development.
Chapters 26 therefore offer conceptual contributions to the development of
health OM theories and techniques.The main body of the book then consists of a
number of case studies that illustrate health OM at work in health care settings.
The concluding chapter of the book discusses future challenges and further areas
of development for health OM.
Scientific interest in the development of theories and techniques to support OM
originated in the manufacturing and service environment. The supply of health
care is often seen as a special type of service industry. Hence, many health care
researchers and managers have turned to OM literature from the industrial and
service sectors when seeking answers to the many problems faced in delivering
health services. In chapter 2, Will Bertrand and Guus de Vries offer a critical
discussion of key theories and techniques that originated in industrial and service
sectors and the ways in which they might contribute to health OM. It will be
demonstrated that many theories and techniques developed in industrial and
service sectors are not directly applicable to health OM, but that nevertheless
the underlying principles may still hold and need to be translated to health care.
Health OM, therefore, requires a specific approach. Chapters 36 develop a
conceptual framework for positioning health OM theories and techniques. An
overview of this framework is given in Figure 1.2.
Earlier the health OM process was considered from the perspective of an
individual provider. The potential breadth of the health OM task was indicated
by the fact that the individual provider might be, for example, a doctor, a hospital
department, a hospital or a network of hospital and community based services.
Figure 1.2 illustrates the potential depth, or differing aspects, of the health OM
agenda of responsibilities. Again, for the purposes of illustration, this agenda will
be discussed from the perspective of an individual hospital.

STRATEGIC PLANNING
(range of services, long-term resource requirements, shared
resources, annual patient volumes, service and effIciency levels)
25 years

patient flows

restrictions

resources

restrictions

feed forward
and backward

PATIENT VOLUME PLANNING AND CONTROL

(available annual capacity per specialty, resource use regulations)
12 years

patient flows

restrictions

resources

restrictions

feed forward
and backward

RESOURCES PLANNING AND CONTROL

(time phased resource allocation including specialist time, number
of patients per period)

patient flows

3 months1 year

restrictions

resources

restrictions

feed forward
and backward

PATIENT GROUP PLANNING AND CONTROL

(service requirements and planning guidelines per patient group)

patient flows

weeks3 months

restrictions

resources

restrictions

feed forward
and backward

PATIENT PLANNING AND CONTROL

(scheduling of individual patients in accordance with guidelines
patient group and resource use regulations)

patient flows

daysweeks

resources

Figure 1.2 Conceptual framework of health OM planning and control processes.

JAN VISSERS AND ROGER BEECH

Strategic planning decisions create the long-term vision of the hospital and the
types of services that it should provide. However, this vision then needs to be
implemented and sustained. This is the function of health OM processes: turning
strategic visions and directions into reality.
Patient volume planning and control represents the start of the process of
deciding how best to transform inputs into outputs. This represents an initial
check that the hospital has the correct types and amounts of services (or transforming processes) in place to meet the needs of the patients whom it plans to
treat.This check will need to be remade at more detailed levels of planning further
down the framework.The concepts used for elaborating the various aspects of the
health OM agenda of responsibilities are discussed in chapter 3.
The process of checking that the hospital has the correct types of services
in place is described in terms of an assessment of the types of units or departments required, the types of resources that they will use and the types of
operations or activities that they will undertake. For example, hospital admissions are cared for on wards (units) that require nursing staff (resources) who
provide general medical care (operations). Similarly, surgical patients are treated
in operating theatres (units) where surgeons (resources) undertake surgical
procedures (operations).
Checking that the hospital has the correct amount of services in place is more
complex and requires an understanding of the relationships between patients,
operations and resources. Chapter 3 begins this process of understanding by
introducing the concepts of unit and chain logistics.
Units undertake similar types of operations for (usually) different types of
patient: for example, operating theatres are used by patients requiring orthopaedic
procedures, urological procedures, general surgical procedures etc. Unit logistics
aims to ensure that the resources used by a unit are allocated in an appropriate
and efficient way. Hence patients might be treated in batches, for example,
general surgery theatre sessions on Monday and Wednesday afternoons. Alternatively, patient access to resources might be prioritised in a way that smoothes peaks
and troughs in terms of demands for resources: for example, delaying the admission of elective patients means that a hospital requires fewer beds than if a
decision is made that all patients (elective and emergency) should be admitted on
the day that their needs for care are identified.
Chains cross unit boundaries and represent the total range of resources required
to produce a product or to treat a patient. Hence, a chain might be regarded as a
patient pathway: for example, the chain of care for stroke might consume resources
provided by imaging departments, general and stroke specific hospital wards, and
physiotherapy departments. Chain logistics is concerned with coordinating the
appropriate and efficient allocation of resources along patient pathways or product
lines, for example, scheduling patient flows in order to avoid delays or bottlenecks in patient care.

INTRODUCTION

Unit logistics is discussed in greater detail in chapter 4: in the planning framework this is referred to as resources planning and control. The discussion of the
allocation of resources within units considers issues such as: whether or not
resources can be shared by more than one patient group; whether resource use in
one unit leads to or follows resource use in another unit; and whether or not a
resource is scarce and as a result might represent a bottleneck in the delivery of
services. For example, CT scanning facilities can be used by more than one patient
group and represents, therefore, a shared resource; the use of resources in an intensive care unit (often a bottleneck) is influenced by the allocation of resources
in operating theatres (leading resource) and the use of resources on general wards
(following resource); and access to the time of clinical specialists for decisions about
patient discharge might represent a scarce or a bottleneck resource that influences
the use of beds on wards. Chapter 4 also discusses methods that can be used to
monitor the efficiency with which resources are utilised within units, for example,
the proportion of allocated operating theatre time that is used for patient care.
Chapter 5 then focuses on chain logistics: in the planning framework this
is referred to as patient group and patient planning and control. Key issues
discussed include: identifying the products to be represented by chains; clarifying
the types of resources that they use; and coordinating and scheduling access to
these resources.
As the planning framework indicates, products might be classified as patient
groups with similar care needs: for example, in the NHS of the UK the patient
pathway for older people is being re-designed such that non-acute nursing and
social care needs will be met by services for intermediate care rather than an
admission to, or an extended stay in, an acute hospital bed.Alternatively products
might be patients with specific diagnoses (for example, stroke patients) or
requiring specific types of procedure (for example, hip replacements). The need
for such precision will be increased by initiatives such as patient booking systems,
which allow patients to select the date of their admission for an elective procedure.
Such initiatives mean that resources must be coordinated and scheduled to meet
the requirements of individual patients.
For some patient groups or types, the chain or pathway might reach beyond the
acute hospital. For example, in the UK, National Service Frameworks are being
used to both improve and standardise care for common conditions.The one developed for stroke demonstrates that although the pathway might start with an acute
admission, it ultimately continues with rehabilitation and secondary stroke prevention in the community. Similarly, efforts to coordinate and schedule care might
stretch beyond the boundaries of the hospital. For example, a shortage of resources
for community based social care might lead to delays in the hospital discharge
of patients.
The conceptual framework developed throughout chapters 25 is summarised
and discussed in chapter 6.This chapter also acts as a prelude to the main body of

JAN VISSERS AND ROGER BEECH

the book: a range of case studies that illustrate OM at work in health care settings.
The conceptual part provides a reference framework for positioning the different
case studies; moreover, the case studies can also be used to reflect on the framework and show the way for its further development.
Most case studies have the hospital as setting. This is logical as processes in
hospitals are most complex, have a shorter throughput time and a higher volume,
compared to other sectors of health care, such as mental health, care for disabled
persons and home care for the elderly. Therefore, one could state that hospitals
are a perfect development ground for health OM. Nevertheless, the principles
of the examples can be easily translated to these other health care sectors. Hence,
as part of the case studies we will reflect on the relevance of the approaches
and ideas expressed for other health care organisations, as many processes of
patients do cross the boundaries of single health care providers. This is an area
for future development of health OM approaches, as a parallel with supply chain
management in industry.
The case studies will be rich in description of the features of health care
processes and illustrated with diagrams and quantitative data. They will provide
excellent material for cases that can be used for the education of future health care
managers and researchers. The book is therefore relevant for Masters students
and postgraduate students, and health care professionals looking for support
for improving the logistic performance of health care processes. Though health
care systems vary much between different countries and have a major impact on
the way health organisations are managed, there is more similarity in the underlying processes of providing care to patients. A description of the primary process
of a hip surgery patient, in terms of the steps taken and the resources required
in each step, does not differ much between countries and is easily understandable in an international context. This is an advantage of the focus of this book on
health OM.
The book concludes with a chapter that discusses the further extension of both
the scope and content of health OM approaches. This reflects the fact that the
hospital was, primarily, used as the setting in the development of the conceptual
framework and throughout the case studies. However, health OM philosophies and
approaches are equally relevant in other settings, for example, when planning the
delivery of services for primary care. This chapter considers areas where more
work is needed to further develop health OM skills and techniques: in other words,
the need for health OM is clear but the ways forward are not. These other areas
include ways of responding to some government initiatives: the translation of these
strategic visions into reality might represent a difficult and complex task.

10

INTRODUCTION

QUESTIONS AND EXERCISES

1

What are the main differences between a national health care system or
government regulated system versus a market regulated or for profit health care
system, and what is the impact on the operations management of the hospital?
Given the decision-making process on managerial issues in a hospital, what will
be important aims for health OM?

REFERENCES AND FURTHER READING

Brandeau M.L. Operations Research and Health Care: A Handbook of Methods and
Applications. Berlin, Heidelberg, New York: Kluwer Academic Publishers, 2004.
Delesie L., A. Kastelein, F. van Merode and J.M.H. Vissers. Managing health care under
resource constraints. Feature Issue European Journal of Operational Research, 105
(2), 1998, 247370.
Meredith J.R. and S.M. Shafer. Operations Management for MBAs. New York and elsewhere: John Wiley & Sons, Inc. Second edition, 2002.
Roth A.V. World class health care. Quality Management in Health, 1 (3), 1993, 19.
Young T., S. Brailsford, C. Connell, R. Davies, P. Harper and J.H. Klein. Using industrial
processes to improve patient care. British Medical Journal, 328, 2004, 162164.

11